Korea Gas, Kyushu set to buy Donggi Senoro LNG

Japanese firm Kyushu Electric Power Co. and Korea Gas (Kogas) will buy 300,000 tons and 700,000 tons of liquefied natural gas (LNG) per year, respectively from the proposed Donggi Senoro LNG (DSLNG) project in Central Sulawesi.

?Kogas and Kyushu replaced Kansai Electric Corp., which backed out of the purchase agreement,? Hari Karyuliarto, head of Pertamina?s LNG business, told reporters.

Both firms may pay a lower price for the gas compared to the price promised by Kansai, he said, citing the decreasing trend in LNG price.

"It will not be signifantly lower," he noted.

The consortium signed in February 2009 a Heads of Agreement (HoA) with Japan?s Chubu and Kansai Electric Power Co. Inc, stipulating that each of them would be supplied with one million ton of LNG per annum from the plant for 15 years, starting end of 2012.

However, the contracts and project are in a state of limbo as Vice President Jusuf Kalla announced in mid June 2009 that gas from the Senoro and Matindok fields should be should domestically.

Kansai Electric then announced that it canceled plan to buy LNG from the project.

Pertamina holds a 29 percent participating stake in DSLNG, while PT Medco Energi Internasional holds 20 percent and Mitsubishi holds a controlling 51 percent share. Gas for the proposed plant will be supplied from Matindok-Donggi Block, which is operated by Pertamina, and Senoro-Toili Block, which is jointly operated by Pertamina and Medco. (godang)